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New York has denied a key permit for a $1 billion Williams Cos. shale gas pipeline, dealing a critical blow to a project that would shuttle fuel to customers in New York City and Long Island. (Photo: Bloomberg)

N.Y. Deals Critical Blow to $1 Billion Shale Gas Pipeline

(Bloomberg) -- New York denied a key permit for a $1 billion Williams Cos. shale gas pipeline, dealing a critical blow to a project that would shuttle fuel to customers in New York City and Long Island.

The New York State Department of Environmental Conservation said Wednesday that the pipeline would result in water quality violations, including those caused by kicking up hazardous metals and disturbing seabed habitats. The denial was “without prejudice,” meaning the company can reapply. Williams said in a separate statement that the DEC had raised “a minor technical issue” with the application, which it will resubmit quickly.

The decision comes as states tussle with the Trump administration over pipelines designed to carry abundant natural gas to the Northeast from shale basins in Pennsylvania, Ohio and West Virginia. President Trump has taken action to speed up approval of interstate gas conduits, last month signing an executive order that aims to short-circuit state regulators who have held up projects by denying necessary permits amid environmental concerns.

Northeast Supply Enhancement, which would add pipeline segments in New York, Pennsylvania and New Jersey to an existing Williams system, joins a slew of gas proposals in the region that have faced delays. Construction of new conduits has failed to keep pace with growing demand for the heating and power-plant fuel, leading Consolidated Edison Inc. to stop accepting applications for new gas service in New York’s Westchester County.

Northeast Supply Enhancement

Another proposed Williams pipeline, Constitution, remains stalled after failing to obtain a water permit from New York. The state’s regulators initially denied the certificate for Northeast Supply Enhancement last year, saying Williams submitted an incomplete application. Other gas projects in the region that have faced -- or are expected to face -- state-level delays include National Fuel Gas Co.’s Northern Access and Southern Co.’s and Enbridge Inc.’s PennEast.

Environmental groups have argued that Northeast Supply Enhancement is unnecessary and would further New York’s reliance on fossil fuels. Williams and one of its customers, National Grid Plc, say the project is needed to meet demand during the winter months, when consumption of the heating fuel peaks and prices can spike.

National Grid, which has customers in Brooklyn, Queens and Long Island, said it remains cautiously optimistic the project will be in service on schedule by the winter of 2020-21. The company will continue to advise new applicants that its ability to provide guaranteed service depends on construction of the pipeline, a spokeswoman said by email.

Pipeline opponents have said the state’s decision would be a signal of New York Governor Andrew Cuomo’s commitment to address climate change. Cuomo has introduced a state-level version of Representative Alexandria Ocasio-Cortez’s Green New Deal, calling for the New York’s electricity to be 100% carbon neutral by 2040.

“The state has made it clear that dangerous gas pipelines have no place in New York,” Kimberly Ong, senior attorney at the Natural Resources Defense Council, said in a written statement. “Instead of further locking in our reliance on fossil fuels, New York is rightly capturing the power of the wind and the sun and investing in a local clean energy economy.”

Northeast Supply Enhancement, which gained federal approval earlier this month, is also awaiting a water permit from the New Jersey Department of Environmental Protection. The agency is expected to make a decision by June 20.

In its letter Wednesday to a unit of Williams, the DEC focused on the impacts of the 17.4 mile (28 kilometer) stretch of 26-inch diameter pipeline, referred to as the Raritan Bay Loop, which would run underwater en route from New Jersey to Queens. The agency said construction of the project would result in the re-suspension of sediments and other contaminants, including mercury and copper, and disturb shellfish beds and other seabed resources.